Please use this identifier to cite or link to this item: https://www.um.edu.mt/library/oar/handle/123456789/85837
Title: Decentralised finance : analysis of governance and regulatory implications
Authors: Zhaber, Amer (2021)
Keywords: Finance
Banks and banking, Central
Financial institutions
Financial services industry
Blockchains (Databases)
Issue Date: 2021
Citation: Zhaber, A. (2021). Decentralised finance: analysis of governance and regulatory implications (Master's dissertation).
Abstract: Decentralised Finance (“DeFi”) is a blanket term for a wide array of new technologies and products that seek to offer innovative ways for consumers to manage their finances autonomously; essentially without the intermediation of traditional (centralised) financial institutions. DeFi has been increasing in volume since 2020 and has now reached an equivalent of USD 67 billion locked in the smart contracts on the blockchain. A new era of the on-chain financial services, ranging from decentralised virtual-assets exchanges, P2P lending to asset management and insurance protocols, is now on the rise. This is achieved by means of autonomous, self-enforced smart contracts deployed on various DLTs (such as Ethereum Polkadot or Waves blockchains). However, despite its asserted distinctions from more traditional or centralised financial products and services, DeFi may implicate similar activities and raise similar investor protection, market integrity and policy issues for international financial regulators to consider, particularly as DeFi activity continues to expand. Therefore, notwithstanding the immediately visible benefits (such as faster, more efficient and censorship resistant, financial services), many aspects pertinent to the DeFi services still remain partially, if at all, addressed. The identified gaps include lack of governance, accountability and financial regulation surrounding DeFi markets. In order to address these gaps, this study provides a hypothetical DAO model that aims primarily to address the potential governance challenges and the associated regulatory implications; and describes to what extent these may be resolved. A potential regulatory approach to be adopted in the context of DeFi is also discussed, suggesting that the DeFi sector would be best supervised by an SRO, rather than a public financial supervisory body. Finally, the study concludes that DeFi markets should evolve from their current form to strike the right balance between centralised and decentralised ecosystems, in order to enable the provision of innovative financial services in a safe, secure and reliable manner.
Description: M.Sc.(Melit.)
URI: https://www.um.edu.mt/library/oar/handle/123456789/85837
Appears in Collections:Dissertations - CenDLT - 2021

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